STX OSV’s YTD order win to around NOK6.2b

Target S$2.05

News: Orders for one OSCV and one large PSV. Yesterday, STX OSV made two announcements:

(1) a contract to design and build one large advanced offshore subsea construction vessel (OSCV) for Ocean Installer and Solstad Offshore valued at NOK1.4b (S$300m). The vessel is scheduled to be delivered from Norway in 2Q14. The contract is still subject to board approval from the Norwegian Guarantee Institute for Export Credits, and the approval is expected around 20 Jun 2012;

(2) a Letter of Intent (LOI) for one 5,700 DWT platform supply vessel (PSV) from Troms Offshore. The vessel will be based on STX OSV’s PSV 07 design and is expected to be delivered in 4Q13. The vessel has secured a charter with Statoil and a firm contract is expected to be signed by end Jun 2012. We estimate the value of the PSV at around NOK400m.

Impact: Raise order win forecasts; upgrade FY12-13F EPS by 4-6%. We estimate that the two new orders lifted STX OSV’s YTD order win to around NOK6.2b and backlog order book to around
NOK19.9b. With the new orders, we expect the yards to stay fully utilised up to end of FY12. Underlying demand for high-end offshore support vessels remains robust and we raise STX OSV’s FY12-13F order win estimates to NOK12b (old: NOK10b) and NOK15b (old: NOK12b) respectively. Consequently, we upgrade our FY12-13F EPS by 4% and 6% respectively. Maintain BUY on the stock with a higher TP of S$2.05 (from S$2.00) based on an unchanged target P/E of 12x FY12F EPS.